Fleeting Fortunes: Athletes’ Planning for Tomorrow Should Start Today

By Antony Gordon, Managing Director, MGO LLP

With the 2017 NFL season officially underway, it is no surprise that the league’s players are focused on the present. They are working to stay healthy, fighting to secure and maintain starting positions, and are focused on producing on the field week in and week out. Athletes with the shortest career expectation of America’s “Big Four” sports, 3.3 years according to the NFL Players Association, are necessarily caught up in the moment.

That said, the same survival impulses that drive immediate success should also sound alarms warning about the future. A lasting career is not guaranteed for any professional athlete. Injuries, contract disputes, lost sponsors, and other factors can limit or even end a career … oftentimes before it truly begins. Players without a long-term plan to transition from the sports world to the professional world may find themselves caught flat-footed and in dire circumstances.

The harsh reality is that many professional athletes have no plan for life after sports, and suffer as a result. A study by the National Bureau of Economic Research found that nearly 16% of NFL players will file for bankruptcy within 12 months of retirement. Similarly, a 2009 Sports Illustrated investigation found that 78% of NFL players go broke within three years of retirement. The astounding numbers of bankrupt former athletes, who once made hundreds of thousands (if not millions) of dollars per year, points to a simple problem with a complex solution – professional athletes must proactively prepare for retirement … but how?

Below we provide initial steps for professional athletes seeking a seamless transition to a post-professional sports career with a promising financial future.

Putting Together the Right Team

A football team is composed of 11 on-field players who are highly-specialized in performing individual tasks, which are often completely distinct from the player next to them. A wide receiver and a lineman have completely different jobs to do, but a team can only achieve success when every teammate knows their role and executes it to perfection.

The team surrounding a professional athlete off the field must be similarly structured. While the athlete’s time, effort and concentration are necessarily focused on their on-field performance, the rest of their lives can, and should, be informed by insights and guidance from a qualified team.

The ideal team is made up of members with distinct yet complimentary skills. Sports Agent, Financial Advisor, Business Manager, PR team and Life Coach: All these team members can play important roles and have profound impact on an athlete’s future. These team members should be in regular conference with the athlete and each other. Just as no NFL team would let a fan walk onto the field and join the team, these team members must also be qualified in their areas of expertise and be committed to working toward a single unified goal – as determined by the athlete.

The two most important aspects of a player’s well-being are inextricably bound together and must have careful, expert-guided attention. Firstly, the player’s emotional, social, and psychological well-being must be nurtured through healthful support and guidance. The second key role is having a qualified, trusted advisor in place to ensure that the player’s finances are balanced, sustainable and, ideally, growing. Together, these essential life components are the foundation of a stable, healthy future.

Assessing Strengths for a Successful Future

A prosperous life after sports will look different for every athlete. One common path for gregarious types is a career as a TV announcer or analyst. Others may use their public celebrity to pursue entertainment careers in acting or music. Some work toward positions as coaches or scouts in order to remain connected to the game. Still others acknowledge the reality that an NFL career is relatively short – and unlike the other major American sports, has very few financial guarantees – and manage their time judiciously to gain an education (formal or otherwise) in finance, communications or other professional pursuits.

Not all post-sports careers will work for every individual. Announcing gigs are highly competitive and opportunities are few and far between. Careers in entertainment are extraordinarily difficult to achieve and require significant talent and even more luck. Even a sound university education is no guarantee of future success, especially when one is forced to miss important years of experience because of the time demands made on a professional athlete.

The important lesson here is that an athlete should take stock of their skills, personality, and ideal future. Somewhere in these overlapping circles there will be a career path providing financial stability, and hopefully, more than a little joy for the athlete off the field. A player who is a keen tactician but does not quite shine on TV could focus on coaching. An athlete who studied finance but finds himself drawn to the entertainment industry may start a career as an agent, helping emerging stars follow their dreams.

Here again, the input of qualified advisors can play an important role. A financial advisor should be involved with every step of career planning. To both guide the path, and also ensure that the initial seed capital is available. A financial advisor may also play an important role in assisting an athlete as they network and develop lucrative connections.

Financial Planning is the Key to Unlocking Long-Term Success

Professional athletes are likely to make more money while playing than they will ever make in their life after sports. The difference between being a victor or a victim often comes down to whether the athlete received the kind of counsel and advice that enabled him to check off all, or at least most, of the following boxes:

Adequate insurance was acquired during peak earning years in order to build a long-term annuity stream for the player and his family post-playing career;

A balanced financial plan was put into place early in his career with a focus on capital preservation and tax-exempt income;

Athletes should not (with few exceptions) permit family members or unqualified childhood friends assume responsibility for their financial or business decisions;

Athletes are trained to be responsive to a “Workout Coach” to whom they have a natural sense of respect. The idea of having a trained Life Coach to replace the athlete’s Workout Coach can ensure that there is accountability and a plan has been successfully tried and tested;

Asset protection and smart tax planning will, more often than not, ensure that athletes who have a public profile are safeguarded from creditors and predators. Moreover, a good CPA will be able to structure an athlete’s finances to allow the athlete to avail himself of solid tax planning and to always live within their budget.

The first step is to achieving these goals is to meet with a certified financial advisor. This essential member of an athlete’s team should be a qualified expert affiliated with a known and respected financial services firm. Following sound advice from a trusted advisor, an athlete can start making decisions with profound, long-term effects, including investing money, planning for retirement, and making wise insurance decisions.

The financial advisor can also help with the next step in financial planning – gaining financial literacy. While an athlete’s team is important, it is also essential that the athlete becomes more familiar with basic financial planning. Ideally, the athlete should know how much money they have, where it is located, and whether taxes are being paid. Maintaining financial control, with the help of a trusted advisor, can help an athlete navigate scams and hidden financial disasters.

Staying a Winner

Following the aforementioned steps is easier said than done. Athletes have significant demands fighting for their attention and the future feels far away. Ironically, it is for these exact reasons that it is so important to start following these steps as soon as possible. With the right team, the pressures of planning for the future can be delegated to experienced hands. By deciding an after-sports career path, a team can start laying the foundation and help the athlete gain key skills, connections, and even mastery over finances, which can help ensure a positive life after sports.

When asked how I would advise an athlete to initiate embracing a healthy mind-set in order to enjoy equal success before, during, and after hanging up their cleats, I find myself more often than not quoting two oft-cited maxims that seem to always hit the spot…

Firstly, keep in mind that it was wasn’t raining when Noah built the ark; and secondly, avoid like the plague, arguably the biggest mistake that has been the downfall of literally hundreds of athletes over the years: don’t spend money you don’t have, to buy things you don’t need, to impress people you don’t like.

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This material is for informational purposes only and should not be construed as financial or legal advice. Please seek guidance specific to your organization from qualified advisers in your jurisdiction.